After weeks of large old crop export sales, things finally returned to more like normal for this time of year this week with the USDA announcing sales of "just" 237,400 MT. That's the equivalent of just under 9 million bushels.

For the entire marketing year the USDA have an export sales target of 1.240 billion bushels. IF sales from here on in only continue to run at 9 million bushels a week we would finish up with final ending stocks of just 65 million bushels by my calculations. That's half of what the USDA is currently projecting.

And that is based on weekly export sales of around 240,000 MT, over the last ten weeks old crop sales have averaged more than double that at 569,000 MT!

Weekly sales need to fall very sharply away over the remainder of the season to avoid ending stocks becoming perilously tight, especially in view of a potentially late harvest.

July soybeans closed at $11.85, up 5 cents; November soybeans closed at $10.62 1/2, up 9 1/2 cents. That narrowed the July/November spread another 4 1/2 cents. Weekly export sales were disappointing for once, in fact that's the first time in the last ten weeks that sales have been a let down. China was present, booking both old and new crop but not in the kind of volumes that we have seen recently. Drought in northeast China's Heilongjiang Province is a potential threat to grain and soybean production there in the coming season. The July future gained 19 cents on the week.

Corn

July corn ended up 7 1/2 cents at $4.36 1/4 per bushel. Crude oil closed at $66.31/barrel, posting its largest monthly percentage gain in more than a decade. A sharply weaker dollar was also supportive, as are continued planting delays in the Midwest. Weekend weather forecasts are favourable however for US farmers to progress rapidly towards their goal of pretty much wrapping up their spring corn programme. Weekly export sales were strong again, coming in at just over 1 MMT. July corn gained 6 cents on the week and 32 3/4 cents for the month.

Wheat

July CBOT wheat rose 6 3/4 cents to close at $6.37 1/4 a bushel. Spring wheat planting delays in North Dakota in particular, and reports of very poor early yields coming out of the south have supported wheat throughout the week, and come to that the month. CBOT July wheat closed up 24 3/4 cents on the week and $1.00 3/4 on the month. That is the biggest monthly rise for two years and takes wheat to its highest levels in four months. Weekly export sales for wheat were neutral. Firmer crude oil and equities added a bit of support for wheat, as to did a weak dollar.

EU wheat futures closed slightly lower Friday with November London feed wheat down GBP0.50 at GBP131/tonne, and November Paris milling wheat down EUR0.25 at EUR161.50/tonne.

The International Grains Council upped it's global wheat production estimate for 2009/10 fractionally to 652 MMT (+0.2%), although they lowered world grain production by 0.3% to 1.721 billion MT.

The main reason for the increased wheat production were upward revisions for China and Russia. Even so, production in Russia is still seen lower than last season, as is also the case for at least another of the world's top five exporting nations: the US, Canada and Ukraine. The unknown quantity in the top five is Australia, who is only just beginning to plant it's wheat crop.

In the UK the weather has improved dramatically over the last few weeks, and with it the overall condition of this year's wheat. Hopefully this will mean more better quality milling wheats in 2009, and a little less feed and low-bushel weight grain.

A sharply weaker dollar was also a little bearish for EU wheat, with the pound hitting it's highest levels against the US unit since early November, and the euro reaching it's highest levels of 2009 so far.

Supportive news are early reports from the US on the first winter wheats being cut in the southern Plain states of Oklahoma and Texas throwing up some very poor yields.

Spring wheat seedings in North Dakota, the largest producing US state by far, have been running well behind schedule and this weekend is widely regarded as the cut-off point for planting if farmers hope to achieve anything like a decent yield. Additionally, crop insurance will only pay out at reduced rates on spring wheat planted after 31st May, which may also encourage some switching into soybeans or corn.

I wouldn't be surprised to see all three trade either side of last night's close, with an early higher opening maybe fizzling out to the downside ahead of the weekend.

Export sales for beans were a little disappointing, although there was some business for China on both old and new crops. Corn had another strong week with sales in excess of 1 MMT. Wheat sales were a tad under expectations.

Actual exports for all three though were stronger than last week and the four week average.

A sharply weaker dollar and strong crude oil will be supportive and likely stop things from slipping too far into negative territory. Wall St is also expected to open higher despite the news from GM.

Crude oil has posted its largest one month rise since March 1999, and at over $66/barrel is at six month highs.

There is a bit of cautious optimism that the recession may have bottomed. Fund money also seems to be re-entering the agricultural arena.

The overnight grains finished a choppy session in positive territory supported by a sharply lower dollar and firm crude oil. Beans closed around 9-10 cents higher, with corn up around 4c and wheat 6-7c higher.

Crude oil had hit $66.17/barrel by midday London time, on track for its largest monthly percentage gain in more than a decade, after Japanese and US data suggested the economic downturn may be moderating.

Oil prices are up by around 20% this month as bullish comments from the Saudi Oil Minister, improved Japanese industrial production and better than expected US durable goods orders are adding to the belief that better times are ahead.

In addition US crude stocks plunged by 5.4 million barrels in the week to May 22, the Energy Administration said, well above analysts' expectations of a 700,000 barrel decline. The decrease was particularly impressive in the light of US refineries increasing their operations by 3.3 percentage points to operate at 85.1% of capacity.

The dollar meanwhile is lower across the board, falling to it's weakest against the pound since early November at $1.6182, after news that South Korea said that it's national pension funds would hold fewer US treasuries in future. The spectre of GM filing the largest bankruptcy in history on Monday also added a bearish tone. Against the euro the dollar fell below $1.41 for the first time this year.

Drought is endangering more than 50 percent of the grain fields in northeast China's Heilongjiang Province, China's largest grain production base, said drought relief officials.

Hou Baijun, deputy commander of the provincial drought relief headquarters, said that 6 million hectares of grain fields, or 53 percent of the province's total are affected.

Argentina's soybean crop has been revised down again to 32.0 MMT by the Buenos Aires Grain Exchange, other estimates are lower still.

The 2009/10 Argentine wheat acreage is forecast at 3.7 mln ha by the BAGE, which would be the smallest area on record, and almost 20% lower that the 2008/09 area of 4.6 mln ha.

Eastern European wheat is also suffering from drought also in several countries and temperatures are set to rise significantly in June, according to forecasters.

This weekend will likely see the end of spring wheat planting attempts in the US, with farmers likely to abandon ideas in favour of alternative crops, particularly soybeans. US wheat prices have risen almost 20% this month as waterlogged fields have hampered spring plantings and winter wheat conditions deteriorate.

If that wasn't bad enough, there is also the chance of frost damage to Canadian and even some northerly US states wheat this weekend and early next week.

Corn plantings in the US are also expected to be largely wrapped up by this weekend, with any remaining unplanted acres likely switched into beans.

Now we eagerly await the USDA's weekly export sales data, released a day later than normal due to the Memorial Day holiday, at 13.30 BST. For beans trade estimates range from 700,000 to 900,000 MT; for corn 700,000 to 950,000 MT; and for wheat from 350,000 to 450,000 MT.

Hurrah! The European Commission has submitted a proposal Thursday to extend the temporary imposition of punitive import tariffs on US biodiesel.

A vote is expected on the proposal next month, which if passed could last for up to five years.

Temporary duties of between 213.8 euros ($297) and 409 euros ($567.5) per tonne were imposed on US biodiesel imports in March in an attempt to stop the US dumping it's own subsidised biodiesel in Europe, exploiting the so-called "splash & dash" loophole.

If you've been living in a cave and don't know what "splash & dash" is then I will explain:

The scam involves shipping biodiesel halfway round the world to the US where a "splash" of mineral-derived diesel is added. The entire consignment then qualifies for a US subsidy and is then shipped to Europe and sold below European prices! Inspired I'm sure you will agree, and also of course ludicrously costly to the US tax-payer too.

Drought in Bulgaria could see wheat production this year fall by more than 30% to 3 MMT, from 4.4 MMT in 2008, according to media reports.

Chairman of the National Association of Grain Producers (NAGP) Radoslav Hristov said his members would hold an extraordinary sitting this week to discuss the condition of autumn and spring crops. NAGP will produce a report which would be sent to the Ministry of Agriculture and Foods, he said.

The country has seen virtually no rainfall of note during May, he added.

"In my opinion the drought problem is now even more serious than in 2007 because then the affected areas were few but now their number is bigger. Condition of spring crops is three times as bad compared with 2007," Hristov explained.

Earlier this week the Bulgarian news agency Novinite described this season's potential wheat yields as "tragic".

Hungary meanwhile has not had any significant rainfall since March, and Romania is on the verge of declaring a "calamity state" with almost a quarter of winter plantings destroyed or damaged by drought.

Young corn and soybeans on the Manchurian Plain are being stressed by dry field conditions and unusual springtime heat, says Gail Martell of StormX. Heavy April rainfall may have encouraged growers to plant corn and soybeans early, but very warm and dry weather has hindered growth in the recent 3-4 weeks. Dryness affects the leading corn and soybean provinces Jilin and Heilongjiang.

Conditions have grown desperately dry in Heilongjiang. Harbin in the heart of soybean country has received a scant 0.1 inch of rainfall in the past 30 days. Mid May is usually the prime time for planting, but growers may have sown their soybeans right after heavy late April showers, believing the rainy season had begun in earnest. Prospects have declined with worsening dryness in May, she adds.

The pound has punched it's way back above $1.60 in early trade this morning, hitting $1.6072 as a bit of risk appetite re-emerges.

According to the Nationwide Building Society, UK house prices rose by a surprising 1.2% in May, easing the annual rate of falls from 15% to 11.3%.

Sterling is now withing spitting distance of it's Wednesday high of $1.6083, it's highest level since Nov 5th 2008.

The dollar is down after news that South Korea said that it's national pension funds would hold fewer US treasuries in future. The spectre of GM filing the largest bankruptcy in history on Monday also added a bearish tone.

The Energy Information Administration said that for the week to May 22, US crude oil inventories fell 5.4 million barrels to 363.1 million barrels, sharply lower that the 700,000-barrel decrease traders had been expecting.

The sharp reduction was particularly surprising given that US refineries increase their operations to 85.1% of capacity from 81.8% a week ago.

Adding to the strength in crude were comments from various OPEC ministers that demand for oil was increasing and that the global economy was now capable of standing crude prices of $75-80/barrel.

OPEC ministers, as expected, decided to leave output quotas unchanged at their meeting in Vienna.

July soybeans closed at $11.79, down 8 cents, and November soybeans closed at $10.53, up 3 cents further narrowing the old crop/new crop spread. July beans tried to push through the $12 mark but couldn't manage it. Planting delays will only serve to push more corn acres into soybeans, so I'd have to stay bearish on new-crop. Nearby however is a very different kettle of codlings. Short-term direction all depends on tomorrow's export sales report from the USDA. Trade estimates range from 700,000 to 900,000 MT. Last week's export sales were a hefty 1,367,600 MT. Will China still be a significant buyer, particularly of old crop? We will have to wait and see, if they are then we could see nearby July break through the $12/bushel level tomorrow.

Wheat

July CBOT wheat settled at $6.30 ½, up 4 ¾ cents, having been 20 up at one stage. Spring wheat plantings in North Dakota are still well behind schedule with more than 2 million acres of intended acres still unplanted as of Sunday in that one state alone. Early winter wheat harvesting in Texas & Oklahoma is providing some very poor yields by all accounts. Lower production prospects exist in various parts of the world, and Canada can expect a frost Sunday through to Tuesday. Indeed, sub-zero temperatures are also possible in the northern Plains next week. Trade estimates for weekly USDA export sales range from 350,000 to 450,000 MT. Last weeks sales were 563,500 MT.

Corn

July corn finished at $4.28 ¾, up 2 ¾ cents. Higher crude was supportive, but a strong dollar tempered gains. Weekend weather forecasts are mixed, although continued rains in Illinois & Indiana next week are a threat to corn acres there. It seems highly likely that the USDA's projected area will not all get in & that there will be some switching into soybeans. The question is how much? Trade estimates for tomorrow's USDA weekly export sales report for corn are 700,000 to 950,000 MT. Last weeks export sales were 822,000 MT.

November Paris milling wheat traded up EUR2.75 at EUR161.75/tonne, and London November feed wheat closed up GBP1.50 at GBP131.50/tonne.

World wheat production for 2009 in many regions continues to shrink, with drought in Eastern Europe badly affecting crops in Romania, Hungary and Bulgaria. There are acute problems too in Spain and outside the EU in Ukraine.

Further afield spring wheat plantings in the US are likely to be curtailed with at least a million acres going unplanted, whilst early planting in Argentina and Australia is also being affected to varying degrees by drought.

In Canada below normal temperatures and freezing conditions Sunday through to Tuesday are expected to cause some damage to winter wheat. First cuttings of winter wheat in southern US states like Oklahoma and Texas are also throwing up some very disappointing yields.

In Europe there is a EUR10/tonne carry between Aug & Nov Paris milling wheat, and a GBP9/tonne carry between July & Nov London feed wheat. Both those differentials continue to scream don't sell the nears unless you absolutely have to.

eCBOT grains closed lower overnight with beans down around 1-2 cents, corn flat to 2 cents easier and wheat down around 4-5 cents.

There's a distinct lack of fresh news today, with Monday's Memorial Day holiday putting back the USDA's Weekly Export Sales report until tomorrow.

Crude oil is steady around $63.50/barrel on comments from the Saudi Oil Minister that the global economy could now support crude at $75-80/barrel. Well, what else would you expect him to say? OPEC are to leave output unchanged, as expected.

US Energy Dept data is also a day late, making it due later this afternoon, and is expected to show crude inventories fell by 700,000 barrels last week.

Weather condition in parts of the Midwest are far from ideal. Soil moisture remains at “once in 50 year” levels for this date in North Dakota, Illinois, Michigan and parts of Indiana, says Allen Motew of QTWeather. The areas particularly on the radar screen are NE North Dakota, NW Minnesota for continued spring wheat planting delays (frost Sunday/Monday too) and NE Illinois, Central and South Illinois and Central and South Indiana for additional rain and planting delays, he says.

Very little, if any, spring wheat will get planted after this weekend. Illinois and Indiana growers will be weighing up their options with regards to switching from corn to beans, unless they have already applied nitrogen.

Some decent rain has finally fallen in Buenos Aires province this past week which may encourage Argentine farmers plant a bit more wheat. Elsewhere in the wheat belt it remains dry.

Japan bought 71,000 MT wheat in a routine tender, most of it US origin.

The dollar is off yesterday's lows, which accounted for some modest weakness this morning.

In Europe the FTSE, DAX and CAC are all around 1% lower, Wall Street is expected to follow suit, especially given the spectre of GM potentially about to file the largest bankruptcy ever.

In the US initial jobless claims came in less than expected - 623,000 as opposed to 635,000. Still, the number of people continuing to receive unemployment benefits rose to 6.78 million - the largest total on records dating back to 1967 and the 17th straight record week.

I am Controller General of Kotoka International Airport,Accra-Ghana,i am . Michael Ofori by name.

we recovered one metallic trunk box contain $9 million. bearing your name as the foreign beneficiary and investor from one unlicensed diplomat who brought the boxes from United State and he was taking the box to Nigeria for an Illegal transaction's without your notice and he transit in Ghana, which on that process the Custom cult him and he was arrested which we interview him and he told us that you are the beneficiary, that this is a transaction's that you where doing in the United State and which he where stealing your funds, but thank God that we have arrested him and he have to go for jail. (quite right too, stealing is wrong kids - Nogger)

The one metallic trunk box is presently under my custody and which i scan the box and the report show that it is money inside the box which i have attach the scan report for you and also sending you a form from the airport for you to fill and return back to me for the delivery of your box. i am making a legal arrangement with a United State Diplomatic Officer who was been assign by the UN to be working with the ( I.M.F ) here in Accra Ghana to commence on the delivery of the box to you in US.

You are to forward this request information's which will enable the diplomat commence on the delivery legally.Your destination address, nearest international airport,direct telephone number and scan copy of your passport for identification.I will forward all legal information's regarding this delivery of your one metallic trunk box worth your funds to you, including flight schedule and diplomat details.

Respond urgently.

Regards,Michael Ofori

Crikey, string up the bunting, the beers are on me. Except I don't actually live in America. Maybe I should do the decent thing and tell Michael this? Nah, Lady Luck is surely smiling on me today, instead I think I will auction off my metallic box containing $9 million to the highest bidder to you my lovely readers. Do I hear 50p in the room anywhere? Come on the box on it's own is worth more than that. Think about the kids. Hit the PayPal button, you know you want it. Ideal present. Backed up with a full certificate of authentication signed my Michael himself. Do it now.

Crude oil hit a six month high of $63.82.barrel overnight, the highest level since mid-November, bolstered by bullish comments from Saudi Arabia and data that showed U.S. home sales picked up in April.

Saudi Oil Minister Ali al-Naimi, speaking on the eve of a meeting of the Organization of Petroleum Exporting Countries in Vienna, said oil prices would continue to rise and that the global economy was now strong enough to support $75-$80 oil.

The US Energy Dept is due to release crude stocks data later today. Expectations are that inventories posted another drop this week, this time by some 700,000 barrels, which would also be supportive for prices.

July soybeans closed at $11.87, up 1 ½ cents, after earlier hitting an eight month high of $12.00 ¾. November soybeans closed at $10.50, up 7 ½ cents. Whilst that still makes $1.37 inverse premium between old and new crop, that differential is far from unjustified. I find it slightly strange that new crop has been gaining on old crop the last few sessions. Whilst US plantings are behind schedule, they are not critically so when you look at last year, and the final yield we managed to end up with. This week's export sales data from the USDA will be interesting to see if China are still around. I'll stay bullish old crop and bearish new crop.

Wheat

July CBOT wheat settled at $6.25 ¾, up 13 ¾ cents. July MGEX spring wheat settled at $7.79 ¾, up 25 cents. Winter wheat conditions were lowered by the USDA last night, when a modest increase had been expected. Spring wheat plantings caught up a bit but are still lagging normal pace. May 31st is widely accepted as the deadline for planting spring wheat, anything planted after that date will likely see sharply reduced yields and leave farmers unable to claim full crop insurance compensation if anything goes wrong. The bottom line here, surely, has to be why even bother taking the chance with soybeans at $12/bushel? Very early yields on winter wheat out of Oklahoma are said to be shocking. I'm strongly bullish new crop.

Corn

July corn finished at $4.26, down 1 ½ cents. Plantings caught up a lot last week, according to the USDA, but forecasts are turning wet again for the week ahead, particularly in Illinois and Indiana which are two of the states furthest behind. Many areas will see farmers penalised on any potential crop insurance claims if they don't get their corn into the ground in the next fortnight. Whilst that might pose a few problems most years, with new crop beans at $10+ it doesn't seem like it would take too much calculating to abandon a few more corn acres & switch them into beans. I'd be mildly friendly to corn.

EU wheat futures closed mostly higher Wednesday despite a weak dollar having a potentially negative impact on the competitiveness of EU cereals on the export market.

Paris November milling wheat closed up EUR2.50 at EUR159/tonne, London November feed wheat closed GBP0.50 higher at GBP130/tonne.

Talk of sharply lower production across much of Eastern Europe, and also in Spain, looks like there is going to be a lot less wheat around in 2009/10.

US futures continue to climb with spring wheat planting delays seeing in excess of a million acres going into alternative crops, mostly soybeans.

Early winter wheat yields in the US are said to be extremely disappointing after drought and an early April freeze badly affected crops in the Southern Plains. In Kansas, Oklahoma and Texas many farmers are ripping up their winter wheat fields early and claiming crop insurance before attempting to quickly get an alternative crop into the ground.

Further north in North Dakota, where spring wheat has just about run out of time to get planted by this weekend, soybeans or corn look like a much more attractive proposition.

Plantings in Argentina and Australia are also under threat from drought.

Meanwhile in the UK a large premium for new-crop still exists which will encourage farmers to carry old crop wheat rather than sell, if they have the storage capacity. An improved weather outlook here may mean more milling wheat and less feed grade this year. It could hardly be worse than last year, could it?

It's still early days but with a final crop of around 3 MMT less than 2008 already expected, and hopefully a higher proportion of milling wheat, we could be looking a smaller feed wheat supply of 5-6 MMT this year. Throw in a 1 MMT+ worth of extra demand from Ensus, you will buy British like you promised won't you lads (?), and the supply:demand equation is starting to look a lot different next time round.

Ukraine Prime Minister Yulia Tymoshenko has returned to Kiev from Libya saying that the two countries have agreed a deal whereby 100,000 hectares of Ukrainian land will be used to grow wheat "on contract" for the North African nation.

As part of a raft of two-way deals Ukraine, who famously suffered gas supply problems with Russia at the height of the winter, will get 600,000 barrels of crude oil from Libya.

Other oil-rich nations such as Saudi Arabia, United Arab Emirates and Bahrain have all been investigating doing similar deals with foreign countries in a strive towards food security after prices for wheat, flour, rice and other staples soared little more than a year ago.

Spillover strength from outside markets added support, with crude oil trading around the $63/barrel mark. A weaker dollar was also supportive.

Beans continue to benefit from the tightness of old-crop stocks. Everyone keeps talking about China switching to Brazil and/or cancelling/deferring US purchases, but all it is at the moment is talk, The hard evidence is that they keep coming back week after week to buy more, and week after week beans continue to pour out of America.

Reports of drought and reduced plantings in China’s Heilongjiang province, the country's top producing region by far, is also a cause for concern.

US farmers made sterling efforts to get their crops into the ground last week, with a dry period providing many with a window of opportunity.

Corn plantings advanced 20 points from a week ago to 82% done, although that still lags the five year average of 93%, it is in line with expectations. Illinois in particular is well behind at 62% complete, compared to 96% normally. Indiana is also well behind.

A dry window and 80-degree temperatures for 7-10 days ended Sunday and it has rained in this region ever since. More rain will fall today, this weekend and most of next week, keeping southern Illinois and southern Indiana on the radar screen, says Allen Motew of QT Weather.

Nationally, US farmers got another 23% of intended soybeans planted, making the crop 48% planted overall, compared to 655 normally. Again this was bang in line with trade expectations.

Spring wheat is 79% done, exceeding the 70-75% expected, but well behind the five year average of 95% complete. With soybean prices where they are there must be a strong temptation now to give up on wheat hopes and think about switching to beans.

For winter wheat crop conditions declined to 45% good-to-excellent condition, three pips down on last week, contrary to expectations of a one or two point increase. There are increased reports of failed wheat being destroyed in Kansas, Oklahoma and Texas to claim the insurance money and replant with alternative crops.

Dryness is a problem for wheat crops in Eastern Europe and Spain, and is also delaying plantings in Australia. Argentina? Don't even go there, sister.

Equities were strong Tuesday with Wall Street closing sharply higher. Breaking news just coming in that GM have failed to get enough bondholders to agree to swap their debt for company stock, looks set to see GM file for chapter 11 bankruptcy Monday. That may dampen the earlier mood of enthusiasm sending US stocks into a tailspin this afternoon. Watch out that grains don't get caught in the crossfire.

Early estimates for grain production in the state of Western Australia in 2009 are for output of 8-11 MMT, between 10-35% lower than the 12.3 MMT produced last year, according to the region's monopoly grain storage facility Cooperative Bulk Handling.

Western Australia is the nation's largest wheat producing state, accounting for around 40% of the national production in 2008 with a crop of 8.9 MMT. Typically around 70% of WA grain production is wheat, implying a wheat crop this year of 5.6-7.7 MMT.

Last week's heavy rains in WA are said to have missed large tranches of the wheat belt entirely.

Meanwhile in the east, plantings in New South Wales and Victoria, which make up around 36% of Australia’s wheat production, have also ground to a halt. Planting, which began around the start of May, has slowed dramatically due to worsening drought conditions in the region, according to StormX. In the past two weeks, even drier conditions have prevailed, with some wheat fields recording no measurable rainfall at all, they say.

Melbourne has had the driest start to a year in 42 years, with just 99 millimetres of rain so far, 160mm short of the average.

Loading a boat? Or waiting on one? Or just plain nosey? Is someone spinning you a yarn when they say that your ASA May hasn't arrived yet? Or that it's anchored off the coast of Teignmouth waiting for a discharge berth when in reality it's still in Rotterdam?

I stumbled across this website the other day which will tell you where your boat is, it's ETA, what it's carrying, where it's going & even at what speed, just about everything but what the captain had for breakfast. Zoom right in so you can virtually see him polishing his rowlocks. You can even skip across the North Sea for a quick shuftie round Rotterdam. Fascinating. And ever so slightly dangerous.

I wonder if they do one for the Gulf of Aden me hearty land lubbers? Hums theme to Captain Pugwash.....

The Russian wheat market has firmed considerably over the last few weeks on strong demand and tight stocks, says the Institute for Agricultural Market Studies (IKAR).

The aggressive government accumulation of intervention stocks has boosted domestic prices pushing second grade wheat prices from the Black Sea port of Novorossiisk up to around $195/tonne, around $15/tonne higher than a month ago, said IKAR.

Higher prices and a stronger domestic currency, with the rouble hitting four month highs against the dollar and euro this past week, are starting to make Russian wheat a little less competitive on the export arena, they added.

Talk that the Russian government may be considering releasing 2 MMT of wheat from intervention stocks however to make room for new crop supplies would weigh on the market were that to happen.

It would be interesting to see if Egypt fancied taking any of that where it to come onto the market after the two countries recent spat over quality.

I'm still sure that there is more to that one than meets the eye, the last GASC tender was won by Russian wheat at around $180/FOB.

The pound broke through $1.60 against the US dollar for the first time since early November Wednesday after strong US consumer confidence numbers last night revived hopes that the worst of the recession is over.

A renewed appetite for risk seems to be emerging, meaning that the dollar is losing it's safe-haven status.

The head of the OECD, Angel Gurria, said last week that economic indicators were beginning to pick up and the world economy was no longer in a free fall. US house sales are turning up, as too are Chinese exports he said.

Meanwhile investment firms didn't feel the need to dip into the Fed's emergency loan program at all last week, that's the first time that has happened since September.

It's early days to say that the UK economy has bottomed, but there seems to be a bit more of an air of optimism around this morning.

That will knock the recent wheat rally of course, London wheat has opened with November down 50p at GBP129/tonne.

July soybeans closed at $11.85 ½, up 19 ½ cents November Soybeans at $10.42 ½, up 11 cents. Beans opened lower on dollar strength and weakness in crude oil, but both those markets turned around late in the session propelling beans to close near session highs. The fundamentals surrounding tight old crop stocks haven't changed, despite comments emanating from China that they may soon switch purchasing to Brazil. If that's true why haven't they done so already? The USDA said after the close that 48% of the soybean crop is in the ground, bang in line with expectations, and behind "normal" of 65% for this time of year. The slowest state is Illinois with just 12% in the ground, compared to 69% normally.

Wheat

July CBOT wheat closed at $6.12, down ½ cent. After the close spring wheat planting came in at 79% done, exceeding the 70-75% expected, but well behind the five year average of 95% complete. It is widely expected that anything planted after May 31st is pretty mucha waste of time. With soybean prices where they are at the moment, there could be quite a few unplanted acres going into beans in 2009. Crop conditions rated good/excellent declined three points to 45%, whereas the trade had expected an increase of 1-2 points.

Corn

July corn finished at $4.27 ½, down 2 ¾ cents. Rains largely held off over the weekend allowing US farmers to get 82% of the crop planted, in line with expectations, although lagging 93% as the five year average. Some states are well behind, Illinois has 62% planted versus 96% normally, and Indiana is 55% compared to 89% on average. This will keep the market cautious over the next few months, although everybody will be mindful that last years even soggier crop finally produced some very impressive yields.

EU wheat futures closed lower Tuesday on consolidation from recent rallies. Paris November milling wheat ended down EUR2.50 at EUR156.50/tonne, London November feed wheat closed down GBP1.50 at GBP129.50/tonne.

Outside markets pressured grains lower after a couple of weeks of steady price increases. Crude oil was lower for most of the day, dipping below $60/barrel at one point.

UK weather has improved considerably after a dry first quarter of 2009, with winter wheat crops looking a lot better than they did a month or so ago. A developing pattern of alternate warm & wet weather should help the crop improve enormously, potentially providing a much better quality wheat harvest than last year.

Things don't look quite so promising in Eastern Europe however. Drought across much of the region, combined with reduced fertiliser and pesticide inputs, seems likely to see yields down anywhere from 10-40% in 2009. Spanish output is also expected substantially lower in the coming season.

Talk that the Russian/Egyptian dispute has been resolved added a little bit of downwards pressure to EU wheat.

The overnight market closed lower, after trading both sides, pulled down by a firmer dollar and weaker crude oil.

Crude dipped below $60/barrel on ideas that a meeting of OPEC members later this week would not see any further production cuts.

Meanwhile. the dollar has bounced back from it's lowest levels of the year Friday.

Nearby beans closed around 9 cents lower, further narrowing the gap between old and new crop. Corn and wheat closed around 7 cents easier.

The USDA will release their latest planting progress and winter wheat crop condition reports after the close tonight. This may provide some direction for the rest of the week.

A fairly dry week last week will have advanced plantings somewhat, but a relatively wet weekend and Memorial Day holiday may have halted progress.

Spring wheat plantings have also been lagging well behind schedule, and what doesn't get in this week probably won't get planted at all.

Comments from the state-backed China National Grain and Oils Information Centre that the country may soon scale back buying US soybeans in favour of Brazilian origin also took the shine of things for beans overnight.

Still, with private analysts estimates of US ending stocks below 100 million bushels, some scaling back might be compulsory before long, especially if plantings, and therefore harvest, continue to fall behind schedule.

The dispute between Russia and Egypt over wheat quality "was a misunderstanding, but it was not a misunderstanding on our part. It was a misunderstanding on the Egyptian part," First Deputy Prime Minister Viktor Zubkov is quoted as telling Reuters.

Unconfirmed reports today appear to suggest that the dispute has been resolved over the weekend. Presumably by the arrival of a large quantity of cash for somebody.

The dispute threatened a very important market for Russia, who have supplied around 3.7 MMT of the 5 MMT of wheat that Egypt had imported up to the end of March in the 2008/09 marketing year.

"The reports about seizure or arrest of Russian grain and participation of the Egyptian prosecutor's office in the investigation are provocative and remind of the worst methods used when somebody is absolutely unable to compete honestly," the Russian Grain Union said in a statement, suggesting that the move was a blatant attempt to renegotiate on price.

There were similar quality issues with Ukrainian wheat early in the marketing year, with some talk of it being excluded from future tenders as an approved country of origin. Whilst this was officially denied, no tenders for Ukraine wheat have subsequently proved successful.

Russian wheat has subsequently been winning this season's tenders by a country mile, consistently coming in $10-20/tonne lower than US, Canadian or European wheat.

Now far be it from me to suggest that there might be a bit of skulduggery going on here, but I wonder if there might be a bit of skulduggery going on here?

"We've got some lovely bread-making wheat for you here Mr Egyptian man, top quality stuff for just $200/tonne."

"Erm, how much is that other stuff over there, yeah that brown stuff, with the rat slash and weevils all over it? I'll have 30,000 MT of that with ten tonnes of good stuff sprinkled on the top. Don't worry about the paperwork, just leave it blank, it's all in Egyptian anyway, we'll fill it all in at our end."

The Bulgarian news agency Novinite says that this season's wheat yields in Bulgaria and Serbia will be "tragic", coming in at around 3.2 MT/hectare, more than 36% lower than last season's yields which were in excess of 5 MT/hectare.

The warm and dry weather this spring has left Bulgarian farmers worried about a very poor year for their corn and wheat crops, they say.

It's a similar story across pretty much the whole of Eastern European, as reported last week. Large areas of Romanian wheat and rye have been completely destroyed or badly damaged by drought the Agriculture Minister there is said to be on the verge of declaring a "calamity state".

Meanwhile Czech grain production is seen down at least 17% and "probably more" and in Ukraine "frosts in April, and drought in March and April have affected crops and the future harvest".

The grain harvest in Ukraine this coming season with produce 39.8 MMT, Ivasenko, analyst of АPК-Inform Agency told reporters last week. That's a decrease of 25.3% on last season's 53.3 MMT.

Hungary meanwhile has not had any significant rainfall since March, and the wheat crop there is seen down 28.5% from last season to just 4 MMT.

Things aren't quite as bad in Poland, although the national statistics office rate both winter and spring wheat crop conditions inferior to last year, on a combination of lack of rainfall and cold night-time temperatures. Winter wheat is rated 3.7 out of 5, compared to 3.9 in 2008, and private estimates are for a crop 5-10% down on last year's 9.3 MMT.

Farmers in Castilla-Leon, the northern region of Spain that normally accounts for around half of the nation's wheat production, will harvest 45% less wheat than in 2008 according to the regional government there.

In what is becoming an all too familiar story, sharply lower prices last autumn when wheat was being drilled caused farmers to reduce plantings. Many have also cut fertiliser application in the face of tightening credit, they said. Barley production in the region will fall 47%, they added.

Many farmers in the region chose to either leave land fallow or plant lower-maintenance crops like rape, sunflowers, field peas or vetches.

Freak storms hit the region at the weekend which may push grain output even lower, according to media sources. The extent of the damage done to winter grains and sunflowers is still being assessed.

Prior to the weekend, on a national level the 2009 grain harvest was already forecast to fall between 34-42%, according to various estimates from farmers unions and grain merchants. That would give us a national grain crop of 13.5-15.4 MMT, compared to 23.3 MMT a year ago.

Even with a bumper crop like last year's, Spain is expected to have still imported around 8 MMT of grain when the current marketing year ends on June 30th.

About Me

Worked in agriculture for over 30 years as a shipper, merchant, trader & broker, but still hasn't got the faintest idea what he's talking about.
Likes beer apparently, so why not do the decent thing an hit the donate button you tight bastard?
He can also provide content for your website like market reports and commodity prices. And if you haven't got a website he can design one for you. In short, the man's a bloody genius.

Disclaimer

All comments on this website are the sole opinion of the author, and are not capable of nor intended to constitute professional advice. Neither can Nogger give any guarantee for the accuracy of any of the information or data contained within this site.

The guy is clearly deranged and you should almost certainly ignore everything that he says.